November 30, 2018
Q: I lost the contents of my home due to a flood. How do I reconstruct my records to prove what I have lost?
A: You need to have a list of the items in your home. A good place to keep that list is on the cloud. To create the list, start by visualizing room by room and the contents. Most business records can be obtained by outside sources and include copies of any tax reports filed, bank and brokerage statements and business records from companies you do business with.
Note: Before any disaster hits take and keep pictures of all contents in your home and store them on the cloud.
Q: I understand it’s time to start gathering my tax information for 2017. But can you tell me what will the per diem rate be for 2018?
A: Yes. The per diem daily rate of $63 was not changed on October 1, 2017, the normal change date, therefore $63 for 2017 and into 2018. Department of Transportation workers can deduct 80% of their per diem.
Q: Is it too late for tax planning?
A: No, there is still time to plan for your 2017 taxes. If need be, you can accelerate your expenses, put new equipment into service before January 1, 2018, and open a 401K Solo Retirement Plan. It allows an elective salary deferral of up to $18,000, ($24,000 if you are 50 or older) of income to be contributed and deducted on your 2017 income taxes as well as 25% of all self-employment net income up to a combined $54,000 contribution. If you are 50 or older, it can be up to $60,000. The Solo 401K must be opened prior to January 1, 2018, but can be funded by the due date of your income tax return including extensions. Note: The contribution limits for a 401k Solo Retirement Plan are very high amounts but you can contribute much less. The important thing here is to open the plan by December 31, 2017 and you can decide later whether to use it or not.
Q: Are there any other tax changes I should be aware of?
A: Yes. Be aware that the Affordable Care Act Penalties for non-coverage for 2017 and beyond keep increasing. Open enrollment for next year begins November 1, 2017 and ends December 15, 2017.
Business standard miles are now deductible at 53.5 cents per mile down from .54 cents in 2016.
Q: What paperwork and information should I put together to prepare my 2017 income taxes?
A: Listed below is what you will need for your income tax preparation. Most tax preparers have income tax organizers to help you organize your information and list what is needed. You can download ours at www.PBSTAX.com.
- 1099s from all companies and/or individuals you’ve done work for – brokers, motor carriers, independent businesses, etc. You must report all income regardless of whether you receive a 1099 or not.
- Weekly or monthly settlements if we are summarizing.
- 1099s or end of year statements from banks for interest and dividend income, stock and mutual funds and mortgage interest statements.
- Schedule K-1 if you are involved in any partnerships or s-corporations.
- W-2P or 1099R for pension and annuity income and distribution.
- 1099s and year end statements for unemployment compensation, social security income and state income tax refund.
- Nights away from home for per diem.
- Determine if you have or are going to make any contributions to an IRA, SEP- IRA, and 401K plans.
- Indicate any estimated taxes paid with corresponding dates.
- 1098s for mortgage interest paid along with property taxes paid.
- Contracts for the purchase and/or sale of equipment or property including refinancing.
- Confirmations from charities for donations in excess of $250 each.
Remember, if you have employees or independent contractors, you are also required to send out your W-2s and 1099s by January 31. This includes self-employed individuals who have hired their children to do work for their business. You must issue W-2s to your children to get the deduction.